Britannia Radio

TaxPayers' Alliance Bulletin - 24th April 2009

Budget 2009

 

The 2009 Budget, which was delivered on Wednesday, will undoubtedly go down in history as one of the most crushingly awful forecasts for the British public finances ever made. Even using unrealistic predictions of the depth of the recession and the speed of the eventual recovery, Alistair Darling still painted a damning picture that is extremely worrying for taxpayers. The TPA was right up there responding to the Chancellor's announcement on behalf of taxpayers, getting an initial response out less than 30 minutes after the speech ended and then providing detailed analysis of the hidden budget nasties throughout the day.

 

The traditional format for Budget week is that the Chancellor's speech is packed full of spin and supposedly good news, and the small print is full of nasty secrets that take a few days to come out. This year was a bit different, given that the news was so bad that Alistair Darling had to confess much of it in the speech itself. That said, we have already identified a number of hidden budget nasties, and there are undoubtedly more to come out.

 

Responding to the Budget, Matthew Elliott, Chief Executive of the TaxPayers' Alliance, said:

 

“This Budget commits taxpayers to a terrifying amount of debt that will burden ordinary families for decades to come. The Government’s proposals are totally inadequate to deal with the size of the crisis we face. £15 billion of efficiency savings are a welcome start, but they are dwarfed by the debt mountain that the Chancellor plans to run up. These are serious times that require radical thinking, so it is staggering that the Government have chosen to turn a blind eye to the huge amounts of wasteful and unnecessary public sector spending. Despite the pretence that he is helping ordinary people and bashing the rich, the Chancellor is in fact increasing the cost of everything from driving to work to a pint of beer. The increase in taxes on high earners is a petty political gesture rather than a serious financial solution. Millions of families around the country are in real crisis, and they need real help, not posturing.”

 

Here is a summary of the TPA's take on the main issues, and some of the Budget nasties we have identified so far:

 

Debt

 

Whilst he undoubtedly hoped that the headline would be the 50% tax rate on high earners (see below), it was the national debt figures that topped the news agenda: borrowing an extra £700 billion over the next few years will have a devastating effect not just on Britain's international reputation but on the personal finances of every taxpayer in the country.

 

William Norton, who joined the TPA research team in the office for Budget Day, has calculated that this means that after taking inflation into account the Government plans to borrow more between 2008-09 and 2013-14 than Britain borrowed to win World War One, World War Two and the Napoleonic Wars put together. Where Napoleon, the Kaiser and Hitler failed to exhaust our nation's financial reserves, it seems this Government might! Read more here.

 

Remarkably, even that £700 billion may not be the full figure. Closer inspection of the Budget's nuts and bolts reveals that the Treasury have refused to count any of the money spent on shares in struggling banks as a loss, despite the collapse in most share prices since taxpayers' money was used to prop the sector up. In effect up to £135 billion of debt has been excluded from the headline total. The details are available here.

 

50% Tax Rate

The tax hike on higher earners which were announced on Wednesday were far more to do with political posturing than any economic or fiscal benefit. Not only will the plans punish success in Britain, and deter foreign talent and investors, but a new calculation from the CEBR even estimates that they will reduce the Treasury's tax revenues by £800 million a year. Read more here.

 

Green jobs

Another of the Chancellor's much vaunted proposals was the creation of 400,000 green jobs in the renewables sector. The Government are yet to reveal details of how they aim to do this, but there are already worrying signs from Spain that a campaign of subsidies for the sector could in fact end up producing a net job loss across the whole economy. The respected King Juan Carlos University in Madrid has just published a report calculating that for every green collar job created by the Spanish Government, 2 jobs were lost in other sectors. If our Government follow the same path, their 400,000 new jobs could put 800,000 other people out of work. Read more here.  

 

Efficiency Savings

One encouraging part of the Budget was the proposal to make £15 billion of efficiency savings. Obviously, in the face of a deficit of £175 billion this year and given the fact that our research has identified much more waste in the public sector than £15 billion, the TPA believes that the Government should go further. Although the intention is welcome, Mike Denham, TPA analyst and former Treasury economist, has raised concerns that the Government's track record suggests that this money may not materialise in full. Read why here.  

 

'Bangers for cash'

The car scrappage scheme announced on Wednesday was also the focus of much media attention. Whilst its supporters have pointed to the fact that Germany, France and Japan have already adopted such a scheme, they fail to take into account the fact that those countries tend to buy their own domestically produced cars. In Britain, only 14% of cars purchased are made in this country. Could the scheme end up using taxpayers' money to subsidise BMW rather than to support the British economy? Read more here.

 

Our presence in the media's coverage of the Budget was extremely prominent, with appearances including:

 

The Sun, Crunch tackle by No 11
Daily Mail, Bangers for cash, Drivers get £2,000 incentive to trade in old cars for new models... but how much will it REALLY help?
Daily Mail, Quotes of the Day
Daily Mail, Going green to cost families £600 every year
Daily Express, Budget 2009: They've ruined Britain
Daily Express, Debt mountain will take decades to clear  
Daily Express: 'Every year we pay more tax only to see it go to the faceless mandarins'
Daily Star, Gord help us all  
Daily Star, Debt swamps nation 
Daily Telegraph, Britain's national debt to reach £1.4 trillion under 2009 Budget
Metro, Do the numbers add up for you?
The Independent, So just whose pips will the Chancellor squeeze?
Financial Times, Letters: Restore our heritage and cut the tax on repairing old dwellings  
Guardian Comment is Free, Susie Squire: Broke Britannia 
Spectator Coffee House, Mark Wallace: Budget 2009: The Budget nasties come to light
Belfast News Letter, Mark Wallace: Tax proposals benefit everyone
ConservativeHome, Matthew Sinclair: The Budget is full of holes 
ConservativeHome, Matthew Sinclair: Taxes on the low-paid
ConservativeHome, Matthew Elliott was part of the expert Budget preview panel 
BBC News Online, Live: Budget 2009
Times Online, The most comprehensive response to the Budget anywhere
Times Online, Prince Charles gets new tax break amid furore of Budget 
Inthenews, Budget 2009: Darling tax plans torn to shreds  
Manchester Evening News, 'Buy now, pay later'
Western Morning News, Darling targets 'the many, not the few'  
Belfast Telegraph, Budget gets mixed response
Daelnet, Cool rural response to crisis budget
Northamptonshire Evening Telegraph, Promise to invest in schools, hospitals and public services
Wales Online, Mixed response to Budget
Scotsman.com, Budget receives mixed reponse
24dash, Mixed reaction for Darling's 'crucial' Budget
MSN Consumer Champion, Darling's Budget: All fur coat and no knickers
Thisismoney: Budget 2009: Bangers for cash http://www.taxpayersalliance.com/media/2009/04/thisismoney-.html

Knaresborough Action Day

 

On Wednesday 6 May we'll be leafleting in Knaresborough Market, North Yorkshire. Our campaign will involve recruiting new supporters but also protesting against the unilateral decision taken by Harrogate and Knaresborough Lib Dems to siphon 10% of their councillor allowances for their own party political activities. If councillors don't hand the money over, they get deselected as candidates without a vote by members. We think this is approaching state funding of political parties by the back door and will be collecting signatures to petition against it. You can read more about the issue in Tim's recent opinion piece in the Yorkshire Post. We'll be meeting at 11am by 'Blind Jack's Statue' in the marketplace. I do hope you'll be able to join us for an important campaign day.  You can find a map here.  If you are coming please do notify us at tim.aker@taxpayersalliance.com.

 

Frederick Forsyth on the TPA EU Campaign

 

On May 4^th best-selling author and eurosceptic campaigner Frederick Forsyth will be making a speech on the EU as part of our EU campaign at the Cambridge Union Society at Cambridge University.  If you would like to come please email our grassroots coordinator Tim Aker tim.aker@taxpayersalliance.com who will provide you with the time of the event.

 

Fighting the Cambridge Congestion Charge

TPA supporter and member of the Association of British Divers Brian Macdowall is continuing to fight and campaign against the Cambridge Congestion Charge. If you live locally and want to join in the campaign please contact him on email; brian.macdowall@abd.org.uk  or phone 07794314077.

Common Fisheries Policy victory

 

Following our high profile research paper and protest against the ecological and economic harm of the EU's Common Fisheries Policy, we are delighted to announce that there are signs that our campaign is proving successful. It is reported today that the EU Commission has finally officially conceded that the Policy is a failure, and Joe Borg the EU Fisheries Commissioner is quoted as saying "We are questioning even the fundamentals of the current policy. We are not just looking for another reform - it is time to design a modern, simple and sustainable system for managing fisheries in the EU." Of course, the full conclusion to be drawn is surely that the EU itself is too incompetent and unaccountable to manage such things at all, and we will continue to make that argument. Thanks again to all who came to our protest and raised the issue with their MPs and MEPs. 

 

TPA supporters on the web

 

We are always keen to hear from TPA supporters, and particularly those who have websites or blogs of their own. Most recently, Jatin Karia has launched a site called http://www.corruptionfromthetop.co.uk/, which looks at the important issue of MPs and Ministers abusing taxpayers' money. Do have a look around Jatin's site, and if you've got a site of your own please link to http://www.taxpayersalliance.com/ and let us know, so we can add your link to the Low Tax Coalition section of our site. 
 

Best of the Blogs

Campaign: Pressgangs are not volunteering, Prime Minister
Non-job of the week: North West Development Agency: RDA World Cup Co-Ordinator  

Better Government: Budget spells tougher times for the NHS  
Better Government: Boston, Balls and the Committee
Better Government: The quango bites back  

Economics 101: Big Government and corruption 
European Union: Scales of Justice  
European Union: On This Day in 1659  

 

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